NEGOTIABLE INSTRUMENTS NOTES

BASED ON AGBAYANIS BOOK AND ATTY. MERCADOS LECTURES

Page 98 of 190


BY: MA. ANGELA LEONOR C. AGUINALDO
ATENEO LAW 2D BATCH 2010
drafts cannot be considered as credits subject to escheat within the
meaning of the law.

Further, a demand draft is different from a cashiers check for this is a
primary obligation of the bank which issues it and constitutes a written
promise to pay upon demand. It is an order to a third party purporting to
be drawn upon a deposit of funds.

If there is any consolation, the telegraphic orders can be escheated in favor
of the government. The agreement to remit creates a contractual
obligation and has been termed a purchase and sale transaction. The
purchaser of a telegraphic transfer upon making payment completes the
transaction insofar as he is concerned, though insofar as the remitting
bank is concerned the contract is executory until the credit is established.

The drawer bank has already been paid the value of the telegraphic order.
It appears in the books of the bank that the amounts represented by the
orders appear in the names of respective payees. If the latter choose to
demand payment, the bank had the obligation to pay them.

134 THE INTERNATIONAL CORPORATE BANK V. SPOUSES
GUECO
351 SCRA 516

FACTS:
Gueco spouses obtained a loan from ICB (now Union Bank) to purchase a
car. In consideration thereof, the debtors executed PNs, and a chattel
mortgage was made over the car. As the usual story goes, the spouses
defaulted in payment of their obligations and despite the lowering of the
amount to be paid, they still failed to pay. Thereafter, they tendered a
managers check in favor of the bank. Nonetheless, the car was still
detained for the spouses refused to sign the joint motion to dismiss. The
bank averred that the joint motion to dismiss is part of standard office
procedure to preclude the filing of other claims. Because of this, the
spouses filed an action for damages against the bank. And by the time the
case was instituted, the check had become stale in the hands of the bank.

HELD:
The main issue though unrelated to NIL in this case was whether or not the
signing of the joint motion to dismiss a part of the compromise agreement
between the spouses and the bank. The answer is no, it is not a part of
the compromise agreement entered by the parties. And thus, the signing
is dispensible in releasing the car to the spouses.

And on the ancillary issue of the case, which is the relevant issue for the
subject, whether or not the spouses should replace the check they paid to
the bank after it became stale, the answer is yes. It appeared that the
check has not been encashed. The delivery of the managers check did not
constitute payment. The original obligation to pay still exists. Indeed, the
circumstances that caused the non-presentment of the check should be
considered to determine who should bear the loss. In this case, ICB held
on the check and refused to encash the same because of the controversy
surrounding the signing of the joint motion to dismiss. There is no bad faith
or negligence on the part of ICB.

A stale check is one which has not been presented for payment within a
reasonable time after its issue. It is valueless and, therefore, should not be
paid. A check should be presented for payment within a reasonable time
after its issue. Here, what is involved is a managers check, which is
essentially a banks own check and may be treated as a PN with the bank
as a maker. Even assuming that presentment is needed, failure to present
for payment within a reasonable time will result to the discharge of the
drawer only to the extent of the loss caused by the delaybut here there is
no loss sustained. Still, such failure to present on time does not wipe out
liability.

Sec. 72. What constitutes a sufficient presentment. - Presentment
for payment, to be sufficient, must be made:

(a) By the holder, or by some person authorized to receive
payment on his behalf;

(b) At a reasonable hour on a business day;

(c) At a proper place as herein defined;

(d) To the person primarily liable on the instrument, or if he is
absent or inaccessible, to any person found at the place where the
presentment is made.

APPLICATION OF SECTION
Establishes the requisites for a sufficient presentment for payment

WHO MAKES PRESENTMENT
Presentment for payment must be made by the holder of the
instrument or by some person authorized to receive payment on his
behalf